Mundus Brief – March 2021

It is commonplace for school pupils in the Francophone world to chant “lapin blanc, lapin blanc, lapin blanc” at the start of every month. But there is something about the practice that shifts one’s thoughts to some behaviours in Swedish affairs, namely, the performative repetition of making policy statements. Like an endless string of simulacrum, the practice is embodied in the annual Statement of Foreign Policy (Utrikesdeklarationen) that the Minister for Foreign Affairs stages every February. Ann Linde (S), Minister for Foreign Affairs, listed Sweden’s key foreign policy priorities, reiterating climate, democracy, gender, human rights and transparency as its flagship themes.

Where Sweden’s place in the world is concerned, Linde reminded us that Sweden eagerly backs the Biden administration. She did not shy away from hiding her enthusiasm for the new American President, rounding off her Statement by quoting a few lines from a poem that was recited at Biden’s inauguration, hinting that Stockholm has bold plans for global political change while remaining committed to its transatlantic links. Linde also dedicated time to discuss Asia, from denouncing developments in Myanmar to calling for more cooperation with China, a key trade partner and export destination. But as Sweden’s views on global issues might seem apparent to some, one sometimes wonders what the public thinks of the country’s global involvement, even if some global ventures open up overseas markets for Swedish export, particularly at the height of a pandemic. In the March edition of the Monthly Policy Review, we analyse the Statement and map out Swedish perceptions and values in the EU.

Making great green leaps forward is an energy intensive process that should involve everyone, not just the state. In that sense, the Minister for Energy and Digital Development, Anders Ygeman (S) said in SVT 30 Minuter that market forces, rather than the state, should determine the energy mix. Throughout February, Mundus’ News team has covered the energy debacle, which cuts deep divisions between people, industry and politics — at least where nuclear energy is concerned. Conservative lawmakers urge the Government to reconsider nuclear options in the event where renewables, like wind and solar, are unable to produce enough electricity to power industry and society on cloudy or windless days. Their appeal grew louder during February when an Arctic blast pushed the mercury below zero, causing households to crank up the heating and pushing electricity prices to new heights. With surging demand for electricity leading opposition politicians to voice concerns over the renewables’ limitations as electricity suppliers burned oil to meet demand, our feature article this month, “It’s Cold Outside – Don’t Vacuum” picks up on the image of Christian Democratic party leader, Ebba Bush posing with a vacuum cleaner in the snow.

Energy provision, which is the lifeblood of the economy, needs to be guaranteed in order to keep the cogs turning, as Sweden undergoes its green transition. While hydropower dams and windmills are typically associated with northern Swedish industry, the region will also host one of the world’s largest hydrogen plants powering H2 Green Steel, and with risk capital now flocking to back cleantech markets, the Mundus Nordic Green News blog inquires if Nordic cleantech markets are overheating.

Restructuring goes much further than that as changes are taking place in how businesses and industries are being run, with more and more harnessing the latest innovations in AI, fintech, robotics and sustainability, issues we have followed closely in both our daily news round up our weekly business edition, Mundus Business Insights.

But where changes are concerned, particularly in the context of a pandemic, we do see some stability. At first glance, Sweden’s economic output appears flat, since sectors like hospitality and tourism have taken a hard hit with the pandemic. Yet our underlying assessment is optimistic. Exporters, like Volvo Cars are beating export and profit expectations, and the property market is surging, with work-from-home schemes pushing urbanites to leave the cities for suburbs and the countryside. Although the 4Q20 GDP fell below expectations, decreasing by 0.2%, it is a sign of buoyancy and that everything is not going off the rails, which appeared to be confirmed by this week’s GDP indicator, up 0.9% in January. Many financial observers point to the soft-touch covid-19 approach that did not shut the economy as seen elsewhere in Europe which caused growth to plunge. If anything, Swedish manufacturing industries’ optimism was recorded by the National Institute for Economic Research (NIER, Konjunkturinstitutet/KI), demonstrating a gentle increase, from January’s 100.9 to February’s 103.6. Confidence, however muted, is vital especially after the disruptions to global supply-chains that we witnessed last year.

We see a confidence boost among consumers, too. NIER’s consumer confidence indicator improved for the third consecutive month, jumping from 94.4 in January to 97.5 in February. Virtually all areas gave the index a boost, bar expectations for personal finances, which saw a slight decrease even if consumers are beginning to shake off last year’s pessimism. Could this be an explainer for Klarna’s rise? The fintech giant beat earnings expectations and is gearing up for an IPO listing – a testament to the Swedish economy’s resilience amid a challenging transformation. Of course, Klarna is just the leading example of fintech, and in the Monthly Policy Review, we take an in-depth look into the sector in “Swedish Fintech: Trust and Growth”, to understand what’s driving its success in Sweden, and what holds it back. 

Optimism is hard currency at this point in time. The pandemic is an example of the kinds of challenges that arise when sailing into uncharted waters that could otherwise jeopardise a far-reaching transformation of an economy and its industries, as seen in the Swedish energy and industries debate. Policies, even foreign policy, can have a significant impact too. Business leaders, law- and policymakers will need to stick to their guns, as unexpected surprises could lurk over the horizon.